"We're going to wait to buy"

This is a response I got earlier this week from renters thinking of buying. My initial reaction was dejection. That lasted for a few minutes.

Educate, advise and consult. These are the personal principles that kicked in as they do with most looking to buy these days. Many are inundated with media messages how high interest rates are. As for education, I pride myself in keeping up to date with industry trends and statistics. I shared a chart with them that home prices are expected to be flat the remaining of the year and then increasing at ~ 4% a year in 2024 and beyond. I advised them that waiting may get them a better rate but it will likely result in paying a higher sales price. Lower rates are bound to bring more people off the sidelines and will push pricing higher with already limited inventory. I consulted with them on different options and they were pleasantly surprised to see that the monthly payment would be less than they expected.

The real deal: $1M price with 10% down payment versus renting for another year

• 4% appreciation rate would mean that $1M value today is likely to be $1,040,000 a year from now ($40K in equity)
• $900K initial loan balance will be ~ $890K after 12 payments ($10K principal paydown)
• $60K+ in rent payments over the next 12 months ($0 equity appreciation and $0 principal paydown)

Waiting could cost them $100,000+ between rent payments and missing out on equity appreciation and principal paydown!

These renters are now actively looking to buy now. Their real estate agent reiterated the same message in asking "do you really want to rent for another year?" The time between July 4th and Labor Day has traditionally been a good time for buyers. Some hit the pause button until September. Serious buyers can fare well in price negotiations especially with sellers looking to close by September.

Thought for this week and beyond: "Be curious, not judgmental" - Walt Whitman.

www.chrisryanloans.com

Refinancing or Buying, Contact Chris Ryan!